Barnes & Noble Completes Microsoft Deal, Stock Up

NEW YORK - Shares of Barnes & Noble rose on Thursday as the bookseller and Microsoft sealed the deal on their partnership, a new Barnes & Noble subsidiary for the Nook e-book reader and digital library.

THE SPARK: Barnes & Noble gets $300 million from Microsoft Corp. in exchange for a 17.6 percent stake in the venture, Nook Media LLC.

THE BIG PICTURE: Terms are unchanged from April, when the deal was first announced. The deal values Barnes & Noble’s Nook business at $1.7 billion. Barnes & Noble Inc., the largest traditional U.S. bookseller, faces tough competition from online retailers like Amazon.com Inc. and discount stores as consumers increasingly move away from traditional books in favor of electronic books. These factors have pushed the chain to invest heavily in its Nook business.

THE ANALYSIS: Janney Capital Markets analyst David Strasser said the deal completion means "money in the bank" for Barnes & Noble, helping ease investor concerns about the bookseller’s cash levels. He kept his "Buy" rating on the stock.

SHARE ACTION: Shares rose 58 cents, or 4.6 percent, to close at $13.28. The stock is still down 8.3 percent this year.

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